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8 September 2021

Will the money raised by Boris Johnson’s new tax hike ever be spent on social care?

At no point in British political history has money been taken from the NHS and redirected elsewhere, and it seems unlikely that will change.

By Stephen Bush

The government will increase National Insurance from 12 per cent to 13.25 per cent next year to do… what, exactly? The headline that Boris Johnson wants (and, with a few exceptions in today’s papers, the headline he has got) is that the money is to fix the social care crisis and to reform social care.  

But if you look at the rest of what he, Rishi Sunak and Sajid Javid are saying, then the one thing that the government has not done is provide the money to fix the crisis and reform social care.  

Instead, it has hiked taxes in order to spend more money on reducing waiting times in the National Health Service, laid out a broad set of principles about what the balance between the state and private individuals should be in paying for social care, and invented a new way to increase income tax through the so-called health and social care levy, which will come into being as a separate line on payslips from the 2023-24 tax year. (“So-called” because the costs of health and social care are far in excess of what the levy raises: just like National Insurance, it’s another tool for the Treasury to increase income tax without saying it is increasing income tax.)   

Politically speaking, Johnson is surely right to believe that mounting NHS waiting times (which were constantly getting longer before the pandemic and are significantly worse now) are a bigger problem for the government today than the social care crisis. But that’s the biggest reason to be dubious about claims that the money for fixing social care is going to come from yesterday’s tax hike: at no point in British political history has money from the NHS been taken and redirected to elsewhere in the British state, and it seems unlikely, to put it mildly, that we are going to start in three years’ time. So the money for social care will have to come from somewhere else, whether it’s more borrowing, taxes elsewhere, or (the most likely alternative in my view) a big I-can’t-believe-it’s-not-income-tax increase to the health and social care levy.  

There are a couple of risks to that approach: the first is that this plan depends on the social care system limping on in its present state, unnoticed by most people, for the next three years. It’s possible that the pressures on social care, the ongoing cuts to local authority budgets, and the ever-growing number of people of all ages in need of social care won’t cause a major crisis before 2023. But it’s equally possible that the problem becomes more acute the wrong side of the next election.  

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The second risk is that the broken manifesto promise and the reality that, for all the talk of ending austerity, the rest of the parliament is going to be one in which spending restraint continues, gives the government a reputation for shiftiness: for breaking its promises and failing to deliver. The comparison that Johnson’s inner circle and the Treasury have kept making is to Gordon Brown’s increase in National Insurance following the 2001 election. The equally important part of Brown’s tax increase is that he didn’t need to do the same thing in 2003, and that by 2005 the NHS was, visibly, in a better state of repair than it had been in 2001.  

The big bet that Johnson is making is that, when the next election rolls around, the United Kingdom will feel and look like a country where the crisis in health and social care is being addressed, even if it isn’t really, and even if the difficult decisions are still being put off and the actual task of fixing social care has been kicked into the next parliament.

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